Turks Certain Baku Ceyhan Will be Azeri Oil Route

ANKARA (Reuters)–Turkey is sure that its proposal for a pipeline to carry the bulk of oil from the Caspian will be the option to be chosen this autumn by an international consortium developing the fields–a senior energy official said.

"We do not expect a negative decision from the AIOC (Azerbaijan International Operating Company)–which will make its decision in October or November," said Yurdakul Yigitguden–undersecretary for the energy ministry.

"We have done all the work that we have to do to promote the proposal. We do not think their decision will be adverse," he told Reuters in an interview.

Turkey has persuaded the key player in the Caspian oil games–Azerbaijan–that its proposal that a pipeline to be laid from Baku to its southern oil terminal of Ceyhan would be the most favorable outlet for oil to be extracted first in the Caspian and later in Kazakh oil-fields.

Turkey holds that the pipeline–also backed by the United States–would also avert further congestion of its narrow watergates of the Bosphorus and Dardanelles–where about 51,000 vessels made transit passages in 1997.

But Russia and Western members of the AIOC–led by British Petroleum and Norway’s Statoil–have voiced concerns about the pipeline bid–saying its cost–put around $2.5 billion–is some $1 billion higher than the closest option.

Last month–Azeri President Haydar Aliyev’s main rival Rasul Guliyev announced that Azerbaijan has been bluffing Turkey for years–adding that Aliyev had no intentions of completing the Baku-Ceyhan pipeline.

Another option being considered is a new pipeline linking Baku to the Georgian port of Supsa–which is the shortest of the three alternatives being considered by the AIOC–which is to develop three offshore Caspian fields under an $8-billion project.

Russia wants the main AIOC oil to flow from Baku through its territory to the Black Sea terminal of Novorossiisk. But this alternative is not preferred by former Soviet republics–which want to lessen dependence on Moscow–and the United States.

Yigitguden said a team of energy ministry officials had gone to Azerbaijan on Monday to give details on the Turkish section of the 1,081-mile Baku-Ceyhan pipeline–which will eventually carry up to 60 million metric tons of crude annually.

"The team will give the Azeris commercial details on the Turkish section of the pipeline project," he said.

Turkey–Azerbaijan and Georgia–the three countries through which the pipeline will pass–met in May to form working groups to finalize technical and commercial details of the project and set a 90-day period until the end of August to complete the details.

"But I cannot say the sides have fulfilled their pledges made in the May meetings," Yigitguden said. "We are preparing to meet again with the other sides soon and all the three sides are now working on the draft accords," he said.

The details of the accords include the per barrel cost of carrying oil–transit fees and the cost of building the pipeline on several sections.

Yigitguden said construction costs of the pipeline could be reduced if it was to be built by Turkish contractors due to cheaper workmanship than that of the Western companies.

"But the fact that the oil pipeline is planned parallel to a gas pipeline from Turkmen’stan and Iran will cut down the construction and maintenance costs," he said.

He said the Baku-Ceyhan pipeline would run parallel about 363 mile to the Iranian gas line–being built from Iran’s Tabriz to Ankara under a $23-billion deal in which Turkey will first get Turkmen and later Iranian gas for 23 years.

"After the AIOC decision–the next thing to do is a detailed engineering work that should be carried out in the first half of 1999," he said.

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